CEOs Mull What’s Ahead For Corporate Business Model

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That’s the consensus of two members of CUNA’s Corporate Credit Union Next Steps Working Group, who both agreed that what NCUA unveiled Friday was closely in line with the team’s expectations.

“Many of the corporates will have to rethink their business model in order to meet the net worth ratio and earnings guidelines. But they have time to do that,” stated Terry West, CEO of Jacksonville, Fla.-based VyStar CU, who chairs the working group. “Many more will have to cut costs so they can operate efficiently and keep fees as low as possible and be able to function without these big margin spreads that were helping some manage fees.”

CUNA Chair Harriett May believes it will be “interesting how the different corporates deal with CUSOs.” The CEO of Government Employees CU in El Paso, Texas, also told Credit Union Journal the future of the corporates holds less complexity, fewer numbers and will be much closer to what they were originally chartered to do. “Not unlike what our forefathers laid out for them in the ’70s.”

While the working group was not surprised by the final rule, it didn’t see the legacy asset plan until it was introduced Friday. “We were not sure what would finally come out of that,” said West. “Do we like the cost associated with the plan? No. But some solution had to be developed. I think the bridge corporate is a solution.”

The working group is still studying the 255-page rule, and West said it is too early to make a call on the regulation. “Time will tell if this proves to be the right solution. But it seems the most workable option. The fact that the Treasury has given the full faith of the U.S. government is extremely positive. So I think NCUA, and everyone, has tried to pull all the pieces together to come up with the most reasonable solution.”

 

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